The investment will focus on renewal of the auxiliary equipment, including boilers, refrigerators, etc., and gaining a bigger share of the domestic market. The main producing facilities as well as the technology and hygiene guidelines at Polva Piim already meet European requirements, according to Aivar Haelm, director of PP.
"We plan to gain a 15 percent share of the Estonian dairy market by 2003," said Haelm, mentioning that it does not matter whose share will drop off. Currently the company has a 5 percent share of the market.
"Now we can witness active redistribution of Estonian dairy market. Large producers are losing their positions because of debts to the suppliers," said Haelm.
As to PP, it is the only dairy that offers one-year contracts and half-monthly payments to suppliers of raw milk.
The company plans to market one third of the whole production domestically by next year. Initially PP exported most of its production. The company's staple exports are milk powder, butter and cream. According to Haelm and his colleague Jaanus Murak from E-Piim, the demand for milk powder has increased several times, and therefore the price for it doubled.
"We have no business with Russia now, though. They surely want Estonian products, but they do not want to pay for them," said Haelm.
After Russian dairies upgraded their technology it became possible for them to make dairy products similar in quality to Estonia's, and high customs fees make export to Russia even more complicated, explained Haelm.
Sven Puusepp, marketing director at PP, said he hopes the new dairy product series "Mumuu", launched this November, will help the company to take advantage of the home market. Two million kroons ($100,000) were spent in developing and marketing the new series.
The present price of raw milk will grow by 15 percent next year, and there is no reason to believe the price will fall, predicted Haelm.
PP has been producing 200 tons of milk daily for six months and employs 200 people, the biggest employer and taxpayer in the town of Polva.
PP was a part of the Uhinenud Meiereid dairy concern until the Dutch company G. Van Den Bergh Nijmegen b.v. took control of over 95 percent of PP's shares this April. The Dutch company has one more Estonian enterprise - Piimix - that is dealing with dairy food production.
Jeroen Derks from G. Van Den Bergh Nijmegen b.v. said that along with The Oak Trading Group food wholesaler his company entered the Estonian market in 1992 and will stay here for longer than some might think. "Our strategic task is to promote Estonian food products in the world, and we feel like ambassadors of this country," said Derks.
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